Two-tiered pension plan still in the works

By Bethany Jaeger
While Gov. Pat Quinn withdrew a proposal last week to require existing state employees and teachers pay more for their health care and pension benefits, creating a two-tiered pension system for newly hired workers is still very much on the table.



Proponents and opponents of the two-tiered concept contained within SB 1292 testified this afternoon before a House committee, and a committee vote is expected Thursday morning. (Changes are expected to the current version.)

A two-tiered pension system for newly hired employees is a critical part of Quinn’s overall budget plan for next fiscal year. He also would short the amount the state pays into the pension system by $2.8 billion over the next two years, but that’s completely separate from SB 1292. “This is a step we have to take, really, to get to that discussion,” said David Vaught, a senior advisor to the governor. He added that a two-tiered system is essential to maintaining a defined benefit plan for public employees. “It’s time to step up and take this one on.”

Rep. Kevin McCarthy, an Orland Park Democrat sponsoring the bill, said reduced benefits for new employees hired after August 1 would help establish a more sustainable pension system that the state could better afford in the future. Illinois ranks last in the nation in terms of having enough money on hand to afford its projected pension obligations.

“All this is going to fit into the final [budget] discussions at the end of the day, but if we don’t make reforms that are included in this bill, talk of any kind of changes in the funding system are very difficult,” he said.

Such business-based organizations as the Civic Federation's Institute for Illinois' Fiscal Sustainability and the Taxpayers Federation of Illinois support the concept of a two-tiered system for new hires. (The General Assembly already uses such a system.) Tom Johnson, president of the Taxpayers Federation of Illinois, described Quinn’s proposed changes as an appropriate way to “modify the plan to reflect today’s reality,” referring to the longer amount of time people draw on their pension benefits because they live longer.

Strong opponents include labor unions, teachers’ unions and the Center for Tax and Budget Accountability. Michael Carrigan, president of the Illinois AFL-CIO, described the proposal as “anti-worker,” while the executive director of the American Federation of State, County and Municipal Employees Council 31, Henry Bayer, said the state pensions aren’t excessive. The average annual pension benefit is $18,000. “You can’t even buy a Ford,” he said.

The Illinois Federation of Teachers’ president, Ed Geppert, testified that Quinn’s plan is “more fiscal nonsense” and that he doesn’t trust the administration’s projected savings. He added that requiring teachers to work until age 67 would cost an additional $1.4 billion in 2009 dollars for the added years of salaries.

The labor and teachers’ organizations also alleged that the state’s failure to make its regularly scheduled payments, not the level of retiree benefits, is the true root of the problem. And reducing benefits for future hires would cause a disincentive to accept and keep a state job, resulting in a lower quality workforce and education.

Ralph Martire, executive director of the bipartisan Center for Tax and Budget Accountability, testified that the state can’t rely on “long-term, highly speculative” savings as a real revenue source to pay pensions. The temptation will be to take the savings up front.

McCarthy said he would try to make more concrete savings estimates available Wednesday.

The legislature’s economic forecasting arm, the Commission on Government Forecasting and Accountability, recently released a report about Quinn’s pension plan. See highlights of SB 1292 and comparisons of Quinn’s plan versus the current payment schedule.

Until Thursday morning, here’s a few highlights of SB 1292:

• If enacted, teachers, state employees and judges hired after August 1 this year would earn the lesser benefit and have to work until age 67 before they could retire without penalty. They could retire at age 62 without penalty if they already put in 35 years.
• The retirement life annuity would be 2 percent of the final average salary for each year of service, with a maximum of 70 percent of the final average salary (based on the final eight years of average salary).
• If workers wanted to retire at age 62, the retirement life annuity would decrease by half of a percent for each month they’re below age 67.
• They couldn’t work another full-time state job or teaching job after they retired and drew upon their pensions. If they did work again, they would have to start repaying into the pension system and suspend their benefits.
• The bill currently would not allow teachers and state employees to buy back time used during pregnancy leave so they could retire on time. McCarthy said he’s working to erase that provision so workers could still buy back pregnancy leave, as they can now.

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Vacant lots employ no one

The former Dominick's grocery store on the left employs no one. Just as the vacant lot at 83rd and Stewart on Chicago's South Side doesn't have anyone on its payroll.

Wal-Mart, the world's largest corporation, wants to build a store at 83rd and Stewart, and help revitalize an area that has few if any large grocery stores--a "food desert."

And some people want to keep it that way.

The Chicago Tribune, free registration may be required for the link, has an editorial today that about that lot. It's part of the Chatham Market redevelopment plan, and a clause in that plan calls for Chicago City Council approval for any store selling groceries with over 100,000 square feet. Two years ago, the council passed an ordinance, which was vetoed by Mayor Richard Daley, that would've forced any store with over 100,000 square feet of retail space, a "Big Box," to pay its workers more than smaller retailers. If that bill had becoome law, it would've been a disaster for Chicagoans. Fewer jobs, higher prices for goods.

From the Tribune editorial:

Despite the size trigger in the Chatham Market development and the now-defunct Big Box ordinance, this controversy has always been more about what's on the shelves than how many shelves there are. Wal-Mart is the nation's largest retailer—and the nation's largest grocer. Organized labor is determined to protect its unionized ranks at area Jewel and Dominick's grocery stores. That means it's determined to keep Wal-Mart and its big grocery departments out of Chicago.

Like Wal-Mart's employees, Lowe's workers also are non-union. Lowe's opened its 117,000-square-foot store in Chatham Market in December. Nobody protested. Lowe's doesn't sell groceries.

The city's latest rejection may not be the last turn of this wheel. Wal-Mart hasn't given up and neither has Ald. Howard Brookins (21st), who represents this area and knows how eager his constituents are for the hundreds of jobs and shopping convenience Wal-Mart would bring. But making this happen requires political courage from the mayor and from aldermen not beholden to labor. And there isn't much evidence of that.

The original developers of Chatham Market, Monroe Investment Partners LLC, vowed four years ago that "Wal-Mart is not now, and will not be, a part of our development." They might have added: A vacant lot is so much better.

Meanwhile, the food desert problem persists in Chicago and other large cities. The City of Chicago is aware of the problem, and as I noted in the related post, they are working to recruit medium-sized grocers (that means not Wal-Mart or Target) into the deserts.

Some people just don't get it.

Related Marathon Pundit posts:

Food deserts continue to plague Chicago
Obama's Wal-Mart connection: Wife served on board of big Wal-Mart supplier
Chicago's "food deserts" well known to Obama
My book report: The Wal-Mart Revolution: How Big Box Stores Benefit Consumers, Workers, and the Economy
The good life of working for the UFCW
Union leaders don't share their members pain
Chicago food desert update: Hyde Park Co-op to close
Big-box shy Chicago facing "food desert"

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One Teamster officer, three former Teamster employees indicted on election fraud charges in Chicago

I'll say it again in the land of the free, use your freedom of choice. Devo, "Freedom of Choice," 1980.

But will workers really have "Freedom of Choice?"

Organized labor, through the Democratic Party, is trying to enact something into law with the deceptive name of the Employee Free Choice Act.

Workers hoping to unionize will be able to, if the bill becomes law, choose to join a union by signing a card--bypassing one of the most sacred foundations of American society--the secret ballot. The legislation passed the House of Representatives in the spring, but it faces a doubtful future in the Senate. If it somehow makes it out of the Senate, President Bush vows to veto the bill.

Opponents of the bill have raised the valid (to me) concern that workers, via the card-signing option, could be bullied into voting in favor of joining a union. In other words, their freedom to make a choice will be taken away from them by the "Employee Free Choice Act."

Unions have been hemorrhaging members since the 1950s, mostly because fewer Americans work in manufacturing jobs. However, government workers being an exception, workers have been less willing, via the secret ballot, to say "Union, Yes!"

The "Employee Free Choice Act" is an attempt, a desperate one, to if not reverse that trend, at least slow it down.

Can union officials be trusted to run an honest "free choice" card signing? Based on the alleged actions of three former Teamster Local 743 employees and one current officer from that local, I have my doubts.

That local, by the way, has a long history of corruption. For more, read this story from not the Wall Street Journal, but the Socialist Worker Online.

From CBS 2 Chicago:

Teamsters Local 743 officer and three former union local employees were indicted on federal charges of stealing ballots in an effort to rig two elections in favor of an incumbent slate of officers in 2004, according to the U.S. Justice and Labor departments.

In two closely-contested elections just months apart, the defendants and others allegedly diverted to their friends, family and confidantes hundreds of mailed, official ballot packages intended for delivery to Local 743 members, then cast the ballots or caused them to be cast to ensure election of the incumbent slate, the indictment alleges.

Local 743 of the International Brotherhood of Teamsters, based in Chicago, represents more than 12,000 members engaged in warehouse, office, medical, service and other industries, and is one of the largest Teamsters locals in the country.

The seven-count indictment was returned Thursday by a federal grand jury, according to a release from the U.S. Attorney’s office. All four defendants are charged with one count of conspiracy to commit fraud by depriving Local 743 of their honest services and to embezzle, or steal, the official ballots, the release said.

Organized labor is not a good environment to exercise "Freedom of Choice."

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Obama expected to walk Congress Hotel picket line today

Okay kids, this one is local. And I'm not parroting Fox News talking points.


I worked at the Congress Hotel for nine years as either a catering or convention services manager. I worked with a lot of interesting groups, including International Mr. Leather, the annual meeting of the leftist rag In These Times, a swingers group, a street gang summit, and some Wiccans.

My time there helps explain why I'm so loosely wired.

Four years ago, the unionized workers there went on strike. My opinion on organized labor is mostly negative--many unions tend to be corrupt dens of nepotism.

However, in this battle, I'm on the side of the union. The dishwashers, bartenders, room attendants, and waiters walking the picket line were not well paid. Their union, Hotel Employees-Restaurant Employees Local #1 was recently cleaned up by the federal government, negotiated a major pay increase for their members with the bargaining unit hired by the big Chicago hotels. All signed on, except the Congress.

The owners are crying they can't afford the pay raise, but don't believe them. The core of the partnership, led by New Yorker Albert Nasser, has been in control of the Congress since 1987. Despite a 1995 bankruptcy declaration, they've obviously found owning the Congress worthwhile. Besides, they could always sell the hotel. The land the hotel sits on--the corner of Congress and Michigan Avenue overlooking Buckingham Fountain--is undoubtedly worth a fortune.

Or the owners could fix up the place and stop maintaining a dump. Renovated and run properly, the place would be a gold mine.

Click here from more on the owners of the Congress Hotel, including their man on-the-site, Shlomo Nahmias.

Sometime today, Senator Barack Obama will walk the hotel picket line with his striking constituents. Just as I support the union in this struggle, I'm with Obama today.

I'll end this post with a little story. I rented out the the hotel's Buckingham Room to an education society once. Two years later, I booked them again--I'd like to think it was because of me they returned. Anyway, when the group's president walked in the room for the second meeting, she pointed out a cracked window, and said, "Look that window is cracked, just as it was two years ago!"

That's the Congress Hotel.

To comment on this post, or to congratulate me on the fact that I live in one of America's "Ten Best Towns for Families," click here.

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